Archive for February, 2010

Schedule Update

The following information has been received from Blum Collins:

We have been advised by Heller’s employment counsel, John Fox and Alexa Morgan, that they are awaiting approval of the final settlement agreement from the firm’s Dissolution Committee and the Creditors’ Committee.  The first settlement agreement was revised with regard to procedural aspects of administration when the court put approval of the dissolution plan on hold, pending settlement discussion between the Creditors’ Committee and the Heller partners.  Fox/Morgan told us that they anticipate these approvals by next week.

New Timeline for Approval of Amended Plan and Payment of Priority Amounts to Employee Class Members

A status report by the Blum| Collins class counsel (Steve Blum, Craig Collins, Teresa Blasberg, and Doug Thorpe)

GOOD NEWS! It appears that as a result of recent efforts to resolve and collect amounts due to the Heller bankruptcy estate, all priority amounts payable to employees under the Settlement Agreement will now be paid by the end of July, 2010.


In September and October we negotiated a settlement of the class claims.  The economic terms of the settlement were (and still are, with very minor adjustments): 


Wage Contracts

Admin. Priority







$2,994,456.80  (100% treated as priority treatment)






(allowed as non-priority general unsecured claim based on vacation entitlement)



to all other allowed claims











Waiting Time Penalties/
Exemplary Damages

Attorneys’ Fees & Costs








(allowed as non-priority general unsecured claim based on WARN damages)









This settlement was tied to a proposed Plan of Reorganization.  Both our Settlement Agreement and the initial Plan were submitted to the Bankruptcy Court for preliminary approval on October 29, 2009.  At the hearing, the Court deferred consideration of the Plan pending progress in mediation of the claims against former shareholders.  That put the Settlement Agreement in limbo since the timing of payments and other important parts of the Settlement Agreement were tied to dates for Plan confirmation and other procedures set forth in the Plan.

Since then, lawyers for Heller and the Creditors’ Committee have been involved in addressing Judge Montali’s concerns about the initial Plan and in attempting to maximize the returns to the Heller bankruptcy estate on claims against those who owed money to Heller.  Those are claims that belong to the Heller estate in which we have an interest but no standing to assert.

After Judge Montali put the first Plan that was proposed on hold, we began discussions with the other side regarding changes in the Settlement Agreement that might be required to accommodate an amended Plan.  These discussions related to procedural issues and the need to amend the Attorneys’ Fees provision because one of the triggers for fees changed as the Plan changed.  Nothing changed regarding the economic terms of the settlement or the amount of our fees.  We exchanged drafts from mid-November until mid-December but final negotiations languished since Heller was not close to being ready to propose an amended Plan.

In December 2009 Heller filed an amended Schedule E (which lists the amounts of undisputed claims) to address errors made in its first filing.  The significance of the amendment was discussed in a January 6 posting on Heller Highwater (  Almost all of our clients are favorably impacted by a change in the date for calculation of the priority amounts of wages from 180 days before the date of filing (December 28, 2009) to 180 days prior to the last day that Heller did business (October 30, 2009), as required by the Bankruptcy Code.  A separate change that impacts very few of our clients but in greater individual amounts is that Heller originally included all accrued sabbatical as a priority claim, which was not permitted under the Bankruptcy Code.  We have not checked employee by employee, but Heller tells us that only 21 employees had reductions in their respective overall Schedule E amounts and that only 35 employees had reductions in their respective priority amounts.  On the positive side, the overall amount of allowed priority claims went up slightly.

We have had several exchanges with Heller’s lawyers related to the calculations that resulted in reduced priority amount for the small number of employees who have sabbatical claims (probably fewer than 10).  These reductions all concern interpretation of the bankruptcy code provision that governs what portion of a claim for sabbatical is entitled to priority treatment.  We are now satisfied that the new Heller calculation complies with the Code even though the original Schedule E created a mistaken impression in the mind of a few class members as to how their sabbatical claims would be treated.

We should mention that Schedule E does not include Warn Act Claims or waiting time penalty claims. Heller disputes those claims and can’t admit liability for those amounts except as part of the settlement.  That means that you can’t tell your share of the settlement of those claims from Schedule E.  You should be aware, however, that those individual employee claims are included in Exhibit A to the Settlement Agreement.  The cumulative total of those claims is reflected in the foregoing chart.  While Blum|Collins has a copy of a draft of Exhibit A, a confidentiality agreement prohibits us from sharing the information at the present time.  Once the settlement receives preliminary approval from the Bankruptcy Court, each member of the class will receive specific information concerning her or his interest in the totals listed in the chart.


Since mid-January the pace has picked up in working out the details of our Settlement Agreement as well as those related to the revised Plan.  Last week we were told the following:

  1. There is a tentative agreed timetable for filing a revised Plan, obtaining preliminary approval of the class settlement, giving notice to the class, obtaining final approval of the class settlement and paying the employee priority claims.  There seems to be a high likelihood that a new plan will be filed by March 31.  In our negotiation of amendments to the Settlement Agreement Heller agreed to a June 1, 2010 deadline for meeting the conditions to closing our settlement.  Heller’s bankruptcy counsel tells us that Plan confirmation and final approval of the class and the Settlement Agreement should indeed be completed before the June 1 deadline, and we would waive that precise deadline if we’re close to a payment date by then.  Assuming things go smoothly without delays caused by objections to the Plan, objections to our settlement or other contingencies that might influence Judge Montali to move the dates, the effective date will be in mid-June and the members of the class will receive their priority amounts in late June or July, 2010.
  2. The non-priority share of the settlement will be paid to our class members, along with other non-priority claimants, as funds become available and the Debtor obtains court permission to make distributions.  The primary sources of funds for non-priority payments are (1) collection of accounts receivable, (2) collection of all or a portion of the Bank of America preference and (3) collection of amounts from former shareholders.  Accounts receivable are self explanatory.  The B of A claims and shareholder claims are discussed below.
  3. The preference claim against B of A is proceeding vigorously.  Bankruptcy counsel for Heller believes that the estate has a good claim but it is very time consuming and expensive to pursue because B of A and its counsel (Pillsbury) are stonewalling.  Heller has provided over 1 million pages of documents and the Bank has produced about half that many.  As a refresher, B of A’s exercise of its security interest was not a breach of its agreement with Heller, which means that Heller does not have a claim that it failed because of B of A asserting its contractual security interest even if the Bank’s original UCC-1 had been terminated.  That is so because a security agreement is always enforceable against the debtor even if it is not entitled to a priority over other creditors who had filed UCC-1s.  The filing of a new UCC-1 within 90 days of the bankruptcy filing, however, is voidable as a preference.  No trial date or date for the motion for summary judgment that is contemplated by Heller has been set.
  4. Counsel for the Creditors’ Committee, Thomas Willoughby, is handling the claims against former shareholders and their successor firms.  Very recently he has made settlements with enough of them sufficient to fund (along with other sources of funds) the priority payments to employees and he anticipates litigating the claims against those shareholders who have not settled.
  5. A new claims bar date will be established for employees (meaning that employees may file new or amended proofs of claim) for several reasons, including because of the amendment to Schedule E.

We hope this report provides the information you need in order to have an idea where things stand.  We will keep you posted on further developments.

Updated Bankruptcy Page

I have added about 30 documents including an updated docket sheet on the Bankruptcy page.  I want to thank all those who answered the call to help out with getting these documents.

I cherry-picked those documents since 12/1/2009 that I thought would be interesting for readers to review.  If you see others documents on the docket which you feel should be posted please let me know and I’ll make arrangements to get them.

Also, it is late at night and I haven’t had much chance to review the new items.  I’d appreciate any analysis from readers – please enter your thoughts in the Comments.

By the way, I do notice that the most recent item is a new appointment to the Unsecured Creditors Committee.

© 2010, copyright Thomas MacEntee

Say What? A Lack of Communication

I’ve been attempting to provide updates as to the status of a possible settlement with the Heller Ehrman LLP estate and the Class Action suit but despite my best efforts, communication seems to be a one-way street as of late.

I just want to say that I am as frustrated as the next ex-Hellerite with the lack of information available especially from Blum Collins which is purporting to represent the best interests of the ex-Heller employees.  I think it is time that I call them out on their recent behavior.

First, ever since the supposed settlement in late October, the lines of communication seem to have shut down.  Now, granted, it may have been due to confidentiality issues related to the settlement but even emailing Blum Collins and asking for an update would be met with silence.

In early January, I and several of the named plainitiffs told Blum Collins that we were not happy with the level of communication and we basically “called them out” on it in private. Despite our best efforts, what appears to be stone-walling continues.

At this point, I really can’t offer much for this site to readers who email me and ask, “what’s going on with the Heller situation?”  I no longer have a PACER connection (someone who could check the docket every few days and send me the filings) but if someone would like to step in I’d appreciate it.  I think we seem to be left to our own devices for getting information.

Why does this matter?  Here’s why:

  • I’ve heard from several ex-Hellerites who are desperate for money to the point where they want to settle individually with the Heller Ehrman LLP estate.  I really don’t blame them.
  • How would you feel if you worked closely with a firm for several months – even to the derision of your former colleagues who said we didn’t need someone to represent us – and once a settlement was announced (with a big fat attorneys fee included), you can’t even get a response to an email?
  • The longer there is silence – especially here on the blog – the more folks think this process has stalled or even worse just imploded like Heller did.  People forget.  The go on with their lives.  They figure they’ll never get the wages and monies that were taken from them.

For all the times that Blum Collins has told me that this blog is a great idea in terms of communication, I keep telling myself, “they just don’t get it.”  Having a blog is one thing.  Using a blog effectively is another.  I signed on with a firm that wants a big chunk of money.  For what?  So I can scramble to get my own info about the status of court proceedings?

At this point, I am not willing to support the current settlement or the representation of Blum Collins any further.  I can’t speak for you as a former ex-Hellerite – each person needs to make their own decision.  You’d think I’d have learned with the Heller implosion not to bend over and get f*cked by attorneys or to trust them again.  I guess I was stupid twice.  Not a third time however.

I’ll probably end up settling for much less than I had expected but I’ve moved on with my life.  I have a new career in a new field with my own company.  I need to keep looking at the glass as half-full but not in a Pollyanna manner.  I don’t have time or resources to waste especially when I feel like I am talking to a wall.

* * *

So there you have it.  I’d appreciate readers’ thoughts in the Comments section.

Over and out.

© 2010, copyright Thomas MacEntee

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Remember the words of Rev. Frank Scott (Gene Hackman in The Poseidon Adventure):

". . . sitting on our butts is not going to help us either. Maybe by climbing out of here, we can save ourselves. If you've got any sense, you'll come along with us."

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